Bad credit PCP Personal Contract Purchase Explained

PCP or a Personal Contract Purchase is an alternative for hire purchase finance. pcp loans picWith a finance option like this, the car would be purchased by the dealer or the lender of the loan and then it would be leased by the borrower.

An initial payment would have to be made as a deposit followed by monthly payment. PCP is a very popular financing option which is quite flexible. This is the best option if you want to upgrade the cars you use frequently.

At the end of the loan term, there is a lump sum amount which would have to be made if you wish to purchase the car.

PCP for those with bad credit

PCP car finance is available today to even those with bad credit.pcp pic

However, some of the loan terms would differ and the loan might be a little less flexible in this case.

The lenders that provide the contract might ask for a larger down payment or they might also charge a higher interest rate.

Even for bad credit PCP, the payments would be split in three parts:

  • There is an initial deposit that would have to be made at the beginning of the loan term. The deposit paid would be higher for those with bad credit.
  • There would be the usual monthly payments.
  • The balloon payments at the end of the loan term which can be 30 to 40% of the cost of the car.

Like a normal PCP, even bad credit PCP allows you to drive the car of your choice for lower payments each month. This is a great financial option for those who wish to have flexibility and still want to pay a lower installment each month. At the beginning of the loan, the amount that you would have to pay as the balloon payment would be fixed.

You would have three options at the end of the term. You can either give the car back to the lender if it is still in a good condition. If you give the car back, you would not have to pay anything more. If you wish, you can pay off the balloon payment and keep the car. You can also exchange the old car with the dealer and get a new one for your car. The residual value of the car can be used for paying the deposit on the new car.

There are not many lenders that actually provide bad credit PCP. However, you can still check with a few websites like British Information, Car Finance and Aztec Vehicles Solution in order to get bad credit PCP.